Purchasing Patented Mining Claims For Sale Without Holding It

With the price of an ounce of the precious metal hitting $1,900 on January 20, 2023, gold has been a commodity of value for millennia and continues to be so today. It may be challenging and burdensome to hold significant amounts of Patented Mining Claims For Sale, even though many investors aim to use it as a store of wealth and an inflation hedge. Its theft can be costly; thus, security measures are frequently used to stop it. Thankfully, there are several methods for following changes in the price of gold without actually owning any.

Gold Receipts

It has been claimed that the oldest type of credit banking involved goldsmiths who would keep the community's gold in storage. Gold depositors would be given a paper receipt in exchange, which they could later exchange for their gold. They could issue receipts for more gold than they had in their coffers because they knew that only a small portion of those receipts would ever be redeemed. A fractional reserve credit system was created as a result.

Investing in gold receipts that may be exchanged for actual gold is still an option today. Even if most government mints no longer do private gold transactions, some savvy private "mints" still do.

Derivatives

Whereas derivatives markets employ gold as the underlying asset and are contracts that allow for the delivery of the gold at some time in the future, receipts are guaranteed by gold and may be exchanged immediately.

• Forward Contract

A gold forward contract offers the contract's owner the right to purchase actual gold at a certain price in the future. Forward contracts are exchanged over the counter (OTC). The buyer and seller can negotiate conditions, including contract expiration and underlying asset type (how many ounces of gold must be delivered and at what location).

• Future Contracts

Forward contracts function similarly to futures contracts, except that futures are traded on an exchange and that the terms of the contracts are established by the exchange and not negotiable. As a result of OTC trading, futures subject both parties to the credit risk of potential default by the counterparty. Exchange-traded futures take this risk away. The delivery of actual gold is sometimes delayed because forward or futures contracts are kept at expiry. The contracts are either closed out (sold) or rolled over into a new contract with a later expiration date.

• Call Options

You may also utilize call options to increase your exposure to gold. Call options offer the owner the right, but not the responsibility, to purchase gold, in contrast to futures or forward contracts, which give the buyer the obligation to acquire gold in the future. In this manner, a call option is only used when the price of gold is advantageous and is allowed to expire worthless in the opposite case. In other words, the premium paid for the option may be viewed as a deposit for the right to purchase gold at a future date at a price set today (the strike price).

The option owner will earn if the real price of gold increases over that predetermined figure. Yet, the option buyer will lose the premium, much like losing a deposit, if the price of gold does not increase over the strike price.

Conclusion

Patented mining claims for sale may serve as a store of value and an insurance policy against unforeseen inflation. Nonetheless, it may be expensive and time-consuming to store actual gold. The good news is that owning gold without a physical supply is possible in many ways. Mutual funds/ETFs, derivatives, and gold receipts are all practical ways to get this exposure. 

Shares of gold mining firms, while first appearing to be a viable option, may not provide investors the exposure to the gold they need as these businesses typically use derivatives markets to hedge their exposure to changes in the price of gold.